Le Tote, Inc. (Lord & Taylor) – Following HBC Settlement, Court Confirms Debtors’ Second Amended Chapter 11 Plan (Albeit with Reduced Distributable Proceeds for General Unsecureds)

Register, or to view the article

March 24, 2021 – The Court hearing the Le Tote cases confirmed the Debtors’ Second Amended Joint Chapter 11 Plan [Docket No. 1092].

On August 2, 2020, Le Tote, Inc. and four affiliated Debtors (“Le Tote” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Eastern District of Virginia, lead case number 20-33332. The Debtors’ lead petition noted between 200 and 1,000 creditors; estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $100.0mn and $500.0mn (funded debt of $137.9mn). In a subsequently filed Schedule A/B, the lead Debtor noted $0 assets and $153.5mn of liabilities [Docket No. 272].

Plan Overview

On March 23, 2021 the Debtors filed a Second Amended Plan, with technical modifications, and attached a redline showing changes to the version filed on February 1, 2021 [Docket No. 1082]. On the same day, the Debtors filed an amended memorandum of law in support of Plan confirmation (the "Amended Memorandum") [Docket No. 1085]. The Amended Memorandum notes that after less-than-expected proceeds in respect of store closing sales, the amount of distributable cash available for unsecured creditors will also be less-than-expected. This development, the Debtors argued, should not derail the Plan's confirmation; the logic behind the argument being a mixture of the fact that no creditors were promised specific returns, that risk factor language generally warned of unfortunate turns in the evolution of te Debtors' bankruptcies and [mostly] that there "is simply no responsible alternative other than to move forward with the Plan."

The Amended Memorandum [Docket No. 1085] explains, “Confirmation of the Plan is the culmination of the Debtors’ challenging chapter 11 cases and represents the best available path to maximize recoveries for all creditors. The Plan itself exemplifies and embodies the global HBC Settlement, which received support from every major constituency in these cases, in light of the unfortunate circumstances caused by COVID-19 and the wind down of the Debtors’ operations. The Plan is consistent with the Bankruptcy Code, provides a meaningful recovery to as many creditors as possible in these circumstances while preserving several litigation assets of the Debtors, and brings these chapter 11 cases to a conclusion. Significantly, the Plan provides for an orderly wind-down of the Debtors’ estates and finality to these chapter 11 cases. While this is far from the path that anyone envisioned when these cases were commenced, the global consensus that has been reached is a tribute to the stakeholders involved in a vastly complicated set of circumstances and issues.

The HBC Settlement established a waterfall for the net proceeds of the Debtors’ store closing sales and other general assets and a separate waterfall with regards to the Urban Proceeds from the Urban Outfitters Litigation. Following payment in full of or reserve for administrative and priority claims (including TSA Shortfall Claims) and wind-down expenses, the HBC Parties are to receive the first $8 million of Distributable Cash (other than proceeds of the Urban Outfitters Litigation), with the next $3 million allocated to general unsecured creditors and proceeds thereafter split 50/50 between the HBC Parties and General Unsecured Creditors. The first $1 million of Urban Proceeds are allocated to general unsecured creditors, with proceeds thereafter split 75% in favor of general unsecured creditors and 25% to the HBC Parties. The Plan incorporates these priority waterfalls exactly as contemplated by the 9019 Order.

Nevertheless, as the Debtors prepared the final Wind-Down Budget following the conclusion of store closing sales on February 28, 2021 and analyzed the final store-closing outcomes, it became apparent that the Debtors would have less Distributable Cash than was previously forecast at the time the HBC Settlement was finalized. To be clear, nothing in the Plan or the 9019 Order ever guaranteed any creditor or a group of creditors a specific recovery. It merely established waterfalls to allocate Distributable Cash — the amount of which was always subject to change once the results of the store closing sales were finalized. All voting creditors were given fulsome disclosure of these risks in the Disclosure Statement. Now that the store closing sales are finalized, it appears that after payment or reserve for administrative and priority claims and wind-down expenses, the initial recovery of Distributable Cash to HBC will in fact be less than $8 million, and there would be no initial distribution to unsecured creditors except for their 75% share (and control of) the Urban Outfitters Proceeds. There remains the possibility of additional Distributable Cash for both HBC and Unsecured Creditors from other litigation, cost savings and miscellaneous sources.

While all parties, including the Debtors, are disappointed that the final amount of Distributable Cash will be less than prior forecasts, there is simply no responsible alternative other than to move forward with the Plan. Since the adjustment to the amount of Distributable Cash came to light, the Debtors have worked tirelessly with the advisors to the HBC Parties and the Committee to finalize a Wind-Down Budget in advance of confirmation. Due to the efforts of all parties, the Debtors are pleased to report that the Wind-Down Budget has been fully agreed to by the parties. The HBC Parties and the Committee shared the burden of a reduced recovery, yet they are fully supportive of confirmation. The Plan will satisfy administrative and priority claims in full, provide a significant distribution to the HBC Parties on the Effective Date and preserves several litigation assets of the Debtors that may lead to meaningful recoveries to all creditors.

The Debtors have been advised that Liquidity Capital II, L.P. (‘Liquidity Capital’), a member of the Committee, has changed its vote to reject the Plan to which the Debtors have consented. As a result of this change, Class 4 has now rejected the Plan by a slim margin as just less than two-thirds by amount of Class 4 Claims would have voted in favor the Plan, although the numerosity requirement is still satisfied. Despite this result, by virtue of the acceptance of Class 3 Seller Note Secured Claims, the Plan is still confirmable. The Plan satisfies each of the confirmation requirements set forth in the Bankruptcy Code even though unsecured creditors have voted against the Plan. While the HBC Parties were at one time ‘statutory’ insiders of the Debtors, as set forth in the Kremer Declaration, they have not been insiders since well before the Voting Record Date. As such, their vote in favor of the Plan is sufficient to confirm the Plan under section 1129(b) of the Bankruptcy Code. Liquidity Capital does not object to confirmation of the Plan.”

The Second Amended Disclosure Statement [Docket No. 880] notes, “The proposed Plan achieves an orderly wind-down of the Debtors’ estates that maximizes the value of all estate assets, including the Debtors’ remaining inventory and certain potential litigation assets stemming from the 2019 acquisition (the ‘Acquisition’) of Lord & Taylor LLC from HBC US Holdings Inc. (‘HBC Holdings’), a subsidiary of Hudson’s Bay Company ULC (f/k/a Hudson’s Bay Company) (‘HBC’), and HBC US Propco Holdings LLC (‘HBC Propco’ and together with HBC Holdings and Hudson’s Bay, the ‘HBC Parties’), a subsidiary of HBC Holdings, and certain post-Acquisition transactions and certain other litigation claims. 

The proposed Plan is the culmination of more than six months of successful going-out-of-business sales, asset sales outside of the ordinary course business, investigations and related diligence into the Debtors’ assets by the Debtors’ independent directors and their advisors and approximately three months of hard-fought post-petition negotiations with HBC. Importantly, the proposed Plan incorporates an integrated settlement of claims and causes of action among the Debtors and HBC. Through this settlement, the Plan provides the ability of the Debtors to satisfy administrative and priority claims in full and to make a significant distribution to unsecured creditors who likely otherwise would receive minimal and substantially delayed, if any, recovery.

The Plan provides this value by settling estate claims and causes of action against HBC Holdings and HBC Propco on account of the Acquisition and the parties’ subsequent business dealings and other potential claims arising on or before the effective date of the Plan (the ‘HBC Settlement’), In exchange, the HBC Parties have, among other things, agreed to subordinate their secured claims under their seller note to administrative and priority claims and split recoveries on account of the Debtors’ remaining assets with unsecured creditors as set forth below. The HBC Parties have also agreed to provide key operational support, enabling the Debtors to extend their store-closing sales and deliver additional value. Finally, the HBC Parties have consented to the disallowance of certain rejection damages claims on account of a master lease held by an affiliate of the HBC Parties and to certain pricing reductions for the Debtors’ critical transition services agreement with certain of the HBC Parties. The HBC Settlement provides the Debtors a path forward to exit these chapter 11 cases while delivering significant value to unsecured creditors — an outcome that would be fraught with significant uncertainty and litigation risk, and likely not achievable at all, absent the HBC Settlement. Despite the Committee of General Unsecured Creditors’ (the “Committee”) initial opposition to an earlier version of a settlement with the HBC Parties, on January 26, 2021, following judicial mediation with the Debtors, the Committee and HBC Parties, a global resolution was reached among the parties. A revised term sheet setting forth the terms of the HBC Settlement following the mediation is attached to this Disclosure Statement as Exhibit D. As a result, the Committee supports implementation of the HBC Settlement through the Plan and will recommend that Holders of General Unsecured Claims vote to accept the Plan. A cover letter from the Committee indicating its support of the Plan and urging Holders of Class 4 General Unsecured Claims to vote to accept the Plan is forthcoming.

The Plan provides the following recoveries to stakeholders:

  • Administrative Claims and other Priority Claims will be paid in full in cash or otherwise unimpaired except to the extent that an individual holder agrees to less favorable treatment
  • Allowed Other Secured Claims will receive, at the election of the Debtors: (a) payment in full in Cash; (b) the Collateral securing such Allowed Other Secured Claim; (c) reinstatement of such Allowed Other Secured Claim; or (d) such other treatment rendering such Allowed Other Secured Claim Unimpaired.
  • Holders of the Seller Note Secured Claim and General Unsecured Claims will receive their pro rata share of Distributable Cash pursuant to the Waterfall Recovery. The Waterfall Recovery establishes the following recoveries following payment in full of Administrative Claims (other than the TSA Shortfall Claim) and Priority Claims:
    • Distributable Cash other than Urban Proceeds is allocated as follows: (i) first, to holders of the Seller Note Secured Claim, until such holders receive $8 million on account of the Seller Note Secured Claim; (ii) second, to holders of Allowed General Unsecured Claims, until such holders have received $3 million on account of such claims; (iii) third, split 50/50 between holders of the Seller Note Secured Claim and the holders of Allowed General Unsecured Claims until the Seller Note Secured Claim is paid in full; and (iv) fourth, to the holders of Allowed General Unsecured Claims.
    • The Urban Proceeds are allocated as follows: (i) first to holders of Allowed General Unsecured Claims until such holders have received $1 million on account of the Allowed General Unsecured Claims; (ii) second, split 75% to holders of Allowed General Unsecured Claims and 25% to holders of the Seller Note Secured Claim; and (iii) third, to holders of Allowed General Unsecured Claims (together with the immediately preceding paragraph, the (“Waterfall Recovery”).

The Plan maximizes creditor recoveries, provides the Debtors a path forward to quickly and efficiently complete these chapter 11 cases while extending their store closing sales to further increase recoveries and has the support of the HBC Parties and the Debtors’ independent directors. The Debtors encourage you to vote to accept the Plan.”

The following is summary of classes, claims, voting rights and projected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement; please note that this summation reflects the state of play prior to revisons at to Distributable Cash, discussed above):

  • Class 1 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $3.6mn and the estimated recovery is 100%.
  • Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
  • Class 3 (“Seller Note Secured Claim”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $35.2mn and the estimated recovery is 32%. Each Holder will receive its pro rata share of the Distributable Cash allocated to the Seller Note Secured Claim, if any, pursuant to the Waterfall Recovery. The projected recovery does not include potential recoveries on account of proceeds of the litigation against Urban Outfitters, the value of which is not yet determined but the Debtors believe to be significant.
  • Class 4 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $82.8mn and the estimated recovery is 8%. Each Holder will receive its Pro Rata share of the Distributable Cash allocated to General Unsecured Claims, if any, pursuant to the Waterfall Recovery. The projected recovery does not include potential recoveries on account of proceeds of the litigation against Urban Outfitters, the value of which is not yet determined but the Debtors believe to be significant. After Holders of Allowed General Unsecured Claims receive the first $1 million of proceeds from the litigation against Urban Outfitters, the proceeds thereafter will be split 75% to Holders of Allowed General Unsecured Claims and 25% to Holders of Seller Note Secured Claim.
  • Class 5 (“Intercompany Claims”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.
  • Class 6 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. 
  • Class 7 (“Le Tote Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.
  • Class 8 (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.

Voting Results

On March 24, 2021, the Debtors' claims agent notified the Court of the amended Plan voting results [Docket No. 1089], which were as follows:

  • Class 3 (“Seller Note Secured Claims”): 1 claim holder, representing $35,151,108.68 (100%) in amount and 100% in number, voted in favor of the Plan.
  • Class 4 (“General Unsecured Claims”): 85 claim holders, representing $25,596,053.34 (66.18%) in amount and 96.59% in number, voted in favor of the Plan. 3 claim holders, representing $13,079,890.35 (33.82%) in amount and 3.41% in number, rejected the Plan.

Asset Sale

On October 22, 2020, further to an August 28th bidding procedures order and an October 15th auction [Docket Nos. 269 and 450, respectively], the Court hearing the Le Tote cases issued an order approving the sale of substantially all the Debtors’ assets relating to the e-commerce platforms of Le Tote and Lord & Taylor to the Saadia Group LLC ("Saadia" or the “Buyer, $12.0mn cash purchase price) [Docket No. 473]. The asset purchase agreement (the “APA”) governing the terms of the sale is attached to the order as Exhibit A.

The Debtors' stalking horse (ZG Apparel Group LLP), which had paced bidding with a $3.75mn cash plus assumed liabilities bid, is entitled to a 3% break-up fee.

This was the second time in as many months that Saadia has caught attention by purchasing fashion assets out of bankruptcy, and doing so by considerably advancing on baseline bids established by debtor-chosen stalking horses. On September 5th, Saadia doubled a $20.0mn stalking horse bid and purchased the assets of e-commerce retailer RTW Retailwinds whose brands include New York & Company and Fashion to Figure.

Questions as to how relatively unknown Saadia would finance the $40.0mn RTW Retailwinds acquisition were answered when Saadia and White Oak Global Advisors ("White Oak") announced that White Oak had provided Saadia with a $25.0mn ABL facility. 

Urban Outfitters Litigation

The Second Amended Disclosure Statement [Docket No. 880] adds: “Prior to the Petition Date, the Debtors commenced a lawsuit against (‘Urban Outfitters’) in the district court for the Eastern District of Pennsylvania alleging violations of the federal Defend Trade Secrets Act and the Pennsylvania Uniform Trade Secrets Act, breach of contract, unfair competition, and unjust enrichment. Specifically, the Debtors allege that in March 2018, executives from Urban Outfitters represented to the Debtors that it wished to pursue an acquisition of the Le Tote business, thereby inducing Le Tote to provide Proprietary. Information to Urban under a Mutual Non-Disclosure Agreement between the parties. Pursuant to the Mutual Non-Disclosure Agreement, Urban agreed not to use Le Tote’s Proprietary Information for any purpose other than evaluating a transaction with Le Tote. The Debtors allege that Urban Outfitters also represented to Le Tote that it had concluded that it lacked the knowledge and expertise to enter the rental subscription business independently and could not do so without acquiring a company like Le Tote. In reliance on the Mutual Non-Disclosure Agreement, the Debtors provided Urban Outfitters with proprietary information about its infrastructure, reverse logistics, and warehouse systems and algorithms, as well as market research and insights that have proved essential to the successful operation of a fashion rental subscription business. The Debtors allege that the Urban Outfitters team that received and reviewed Le Tote’s Proprietary Information also received multiple extensive tours of the Debtors’ facilities. Urban Outfitters abruptly abandoned the transaction in May 2018, citing a failure to obtain the approval of its Board of Directors. Shortly thereafter, Urban Outfitters launched its own competing fashion rental subscription business Nuuly, which the Debtors believe was developed through the misappropriation of the Debtors’ proprietary information.

On August 7, 2020, Urban Outfitters filed a motion to dismiss, asserting that the Debtors failed to establish any valid claim for relief for alleged trade secret misappropriation and breach of contract claim. The Debtors have contested the motion and the case is pending.”

Committee Standing Motion and the Debtors’ 9019 Motion [Docket No. 880]

The Disclosure Statement provides: “On December 17, 2020, the Committee filed a motion seeking standing to pursue certain estate claims related to the Acquisition and attacking the Initial HBC Settlement as inadequate [Docket No. 694] (the ‘Standing Motion’)….These claims can generally be divided into six categories: (1) constructive fraudulent transfer claims based on the Acquisition; (2) recharacterization and avoidance action with respect to the prepayment of the Inventory Note; (3) recharacterization and equitable subordination with respect to the validity and priority of the Seller Note; (4) claims with respect to breaches of the Transition Services Agreement; (5) an avoidance action with respect to setoffs under the Omnibus Agreement; and (6) lien avoidance actions relating to alleged perfection issues impacting the extent and validity of the HBC Prepetition Liens and HBC Prepetition Collateral (each as defined in the Cash Collateral Order). The Committee believes these claims are colorable and could result in a significant recovery for the Debtors’ Estates. The Standing Motion also constitutes the commencement of a Challenge’ as defined in the Cash Collateral Order, pursuant to which the Committee is challenging the liens and claims of the HBC Secured Parties.

On January 11, 2021, the Debtors filed a 9019 Motion. As set forth in the 9019 Motion, the Debtors believe that the HBC Settlement will pave the way towards confirmation of a chapter 11 plan that fully pays all administrative and priority claims, and, crucially, will provide a significant distribution to general unsecured creditors—a notably successful outcome in a liquidating retail bankruptcy case. On January 26, 2021, the Committee filed an objection to the 9019 Motion [Docket No. 844] (the ‘9019 Objection’).

In connection with the Standing Motion and the 9019 Motion, the Debtors, the Committee, and HBC agreed to participate in judicial mediation with respect to all matters and outstanding disputes related to foregoing. On January 8, 2020, the Bankruptcy Court entered an order appointing the Honorable Frank J. Santoro as judicial mediator. During the course of the mediation, the parties reached the terms of a global settlement On January 26, 2021, the parties reached a settlement, attached hereto as Exhibit D and incorporated herein by reference. On [●], 2021, the Committee withdrew the 9019 Objection and the Standing Motion, and supports implementation of the HBC Settlement through the Plan.”

On February 2, 2021, the Committee filed the notice as to their withdrawal of the 9019 Objection and the Standing Motion [Docket No. 881].

Key Documents

The Disclosure Statement [Docket No. 880] attached the following exhibits:

  • Exhibit A: Plan 
  • Exhibit B: Corporate Structure Chart 
    • Exhibit C: Disclosure Statement Order
  • Exhibit D: Settlement Term Sheet

On March 1, 2021, the Debtors filed a Plan Supplement to their Second Amended Joint Chapter 11 Plan [Docket No. 990], and attached:

  • Exhibit A Form of Plan Administrator Documents
  • Exhibit B Wind-Down Budget
  • Exhibit C Schedule Retained Causes of Action
  • Exhibit D Schedule of Assumed Contracts

Petition Date Perspective

2019 Acquisition of Lord & Taylor

11 months prior to filing, the Debtors purchased a majority holding in Lord & Taylor from Hudson's Bay Company (TSX:HBC) for $75.0mn and a $25.0mn secured note with HBC keeping a minority equity position (now 27.64%). At the time, Rakesh Tondon, Le Tote’s founder and CEO commented, “Since founding Le Tote, it’s been our mission to push the boundaries of retail. We’ve strived to lead the charge in developing innovative, intuitive, value-driven ways for customers to engage and consume. We’re excited to bring Le Tote together with Lord + Taylor, a storied brand that has stood for quality, style and service for nearly two centuries. With this acquisition, we continue our journey in creating the future of retail.”

Marketing of Assets and Store Closings

The Debtors "believe there remains value in their businesses as a going-concern, and have explored potential transactions surrounding Le Tote and Lord & Taylor in the preceding months" and will continue marketing the Le Tote and Lord & Taylor assets while in Chapter 11. Following an initial outreach to 128 parties, approximately 13 parties entered into confidentiality agreements with the Debtors. The Debtors are "engaged in active dialogue with several potential bidders with respect to both Le Tote and Lord & Taylor and will continue this dialogue postpetition."

Citing a "perfect storm" the Debtors Lord & Taylor have entered into a store closing agreement with Hilco Merchant Resources, LLC and Gordon Brothers Retail Partners, LLC (together, the “Consultant”) to conduct store closing sales at their 38 Lord & Taylor (bricks and mortar) locations.

Filing Date Plan Overview

Although not  a “prepack,” the Debtors have already filed the first iteration of each of their Plan and Disclosure Statement, with the Disclosure Statement providing the following Plan overview: “Pursuant to the Plan, Holders of Claims and Interests will receive the following treatment in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for, such holders’ Claims and Interests:

  • Holders of Allowed Other Priority Claims will receive payment in full in Cash of such Holder’s Allowed Other Priority Claim or other treatment rendering such Claim Unimpaired.
  • Holders of Allowed Other Secured Claims will receive, at the election of the Debtors: (a) payment in full in Cash of such Allowed Other Secured Claim; (b) the Collateral securing such Allowed Other Secured Claim; (c) reinstatement of such Allowed Other Secured Claim, notwithstanding any contractual provision or applicable non-bankruptcy Law that entitles the holder of such claim to demand or to receive payment prior to the stated maturity of such Allowed Other Secured Claim from and after the occurrence of default; or (d) such other treatment rendering such Allowed Other Secured Claim Unimpaired.
  • To the extent not already indefeasibly paid in full in Cash, Holders of Allowed ABL Secured Claims will receive payment in full in Cash of such Holder’s Allowed ABL Secured Claim.
  • To the extent not already indefeasibly paid in full in Cash, Holders of Allowed Term Loan Secured Claims will receive payment in full in Cash of such Holder’s Allowed Term Loan Secured Claim.
  • Holders of Allowed Secured HBC Claims will receive payment in full in Cash of such Holder’s Allowed Secured HBC Claim.
  • Holders of Allowed General Unsecured Claims will receive their Pro Rata share of the Distributable Cash, if any, pursuant to the Waterfall Recovery.
  • Holders of Le Tote Interests will not receive any recovery or distribution under the Plan on account of such Le Tote Interests.
  • Holders of Section 510(b) Claims will not receive any distribution on account of such Section 510(b) Claims. The Debtors are not aware of any valid Section 510(b) Claims and believe that no such Section 510(b) Claims exist.”

Events Leading to the Chapter 11 Filing

The Disclosure Statement provides: “A confluence of factors contributed to the Debtors’ need to commence these chapter 11 cases. These include:

(a) the general downturn in the retail industry and the shift away from shopping at brick-and-mortar stores, which has led to a decrease in sales; 

(b) a challenging commercial environment over the past several years brought on by increased competition from retailers like Walmart and Amazon; and 

(c) the enormous impact of the COVID-19 pandemic, which has forced retailers across the country to stomach the expense of brick-and-mortar assets which were rendered unusable for a prolonged period of time. 

Over time, these factors have tightened the Debtors’ liquidity and complicated their vendor relationships, culminating in a liquidity crisis by the end of March 2020, when the Debtors faced dwindling cash flows, inaccessible inventory, and the inability to access even incremental liquidity. The combination of the above factors precipitated these chapter 11 cases.”

But wouldn't a clothing "rental" business with an established online presence have relative advantages dealing with COVID-19? Apparently not. The Disclosure Statement provides: "Even before the emergence of the COVID-19 pandemic, like many other retail companies, the Debtors were under significant pressure from adverse macro-trends, including increased competition among both online retailers and established brick-and-mortar retailers that have less leveraged capital structures and greater economies of scale. These factors have been greatly compounded by the devastating impact of COVID-19 that has caused retailers throughout the country to close their doors….COVID-19 has also caused a drop in subscriptions for Le Tote, as the Company’s subscriber base has suffered from the wave of job losses gripping the country and the demand for apparel has diminished due to hundreds of millions of Americans affected by stay-at-home orders."

Prepetition Indebtedness

As of the Petition date, the Debtors have outstanding secured debt obligations in the aggregate principal amount of approximately $137.9mn under: (a) the ABL Credit Facility; (b) the Term Loan Credit Facility; and (c) a promissory note, dated as of November 8, 2019, issued to HBC Propco with a maturity of November 8, 2021 (the “Seller Note”). The Debtors’ aggregate secured debt obligations are depicted in the table below.

 Secured Debt

Agent / Beneficiary

Maturity

Commitment / Original Principal Amount

Outstanding Principal Amount

ABL Credit Facility

Wells Fargo, N.A.

Nov. 8, 2024

$225 million

$77.2mn

Term Loan Credit Facility

TCG BDC, Inc.

Nov. 8, 2024

$30 million

$31.5mn

Seller Note

HBC LLC US Propco Holdings

Nov. 8, 2021

$30.4 million

$29.2mn

Total Secured Debt

$137.9mn

About the Debtors

According to the Debtors: “Le Tote is a fashion subscription service that lets women rent clothing and accessories for a flat monthly fee. Members choose the items they want to wear and can keep them as long as they like. Members also have the option to purchase items at a discount. Le Tote’s data-driven model is powered by proprietary algorithms and in-house operational solutions. Le Tote partners with hundreds of brands including French Connection, Vince Camuto, BCBGeneration, Kate Spade, Rebecca Minkoff, Calvin Klein and more. Founded in 2012 by Brett Northart and Rakesh Tondon, the Y Combinator backed company has raised venture funding from Andreessen Horowitz, Google Ventures, Azure Capital Partners, Lerer Hippeau Ventures, Simon Venture Group, Sway Ventures, Epic Ventures, Arsenal Venture Partners, Funders Club and others.”

The Disclosure Statement adds: “The Debtors are the combination of Le Tote — a venture-backed fashion rental subscription service founded in 2012 in San Francisco — and Lord & Taylor LLC (‘Lord & Taylor’) — the iconic luxury retailer which traces its origins to 1826 in New York. Through Le Tote and Lord & Taylor, the Debtors operate both an online, subscription-based clothing rental service and a full-servicefashion retailerwith 38 brick-and-mortarlocations (the “Stores”) with a robust e-commerce platform. Through multiple business channels, the Debtors offer more than 150 brands of clothing and accessories for rental or sale. Le Tote acquired Lord & Taylor from HBC US Holdings Inc. (‘HBC Holdings’), a subsidiary of Hudson’s Bay Company ULC (f/k/a Hudson’s Bay Company) (‘HBC’), and HBC US Propco Holdings LLC (“HBC Propco”), a subsidiary of HBC Holding….”

Corporate Structure Chart

Read more Bankruptcy News